What Biden’s American Jobs Plan Means for Rail

US President Joe Biden has announced how it plans to invest in infrastructure, including rail, in his administration’s American Jobs Plan, which will see a 2 trillion USD investment over the next eight years, equating to roughly 1 percent of GDP.

In the White House statement the administration said that despite the United States being the wealthiest country in the world, it ranked 13th in terms of its infrastructure. That is why 621 billion USD are to go towards infrastructure spending dedicated to rail systems, as well as roads, bridges and ports. Creating jobs and investing in improving the country’s infrastructure will see funds going to the rail industry:

  • 85 billion USD to modernise public transit, incl. replacing rail cars, repairing stations and expanding rail into new communities
    The Department of Transportation estimates that there is a repair backlog for 5,000 rail cars, 200 stations, and thousands of miles of track, signals and power systems. This investment is a doubling of federal funding for public transit and will help work off the repair backlog.
  • 80 billion USD to address Amtrak’s repair backlog
    In the US, rail does not have a multi-year funding stream that would pay for deferred maintenance, improvements to existing rail corridors, or the construction of new lines. Rail projects are already drawn up that are in need of funding. These would deliver new intercity services. The 80 billion USD will go towards Amtrak’s repair backlog, modernising the Northeast Corridor, improving existing corridors and connecting new city pairs. The funds would also contribute to improving grant and loan programmes that address passenger and freight rail safety, efficiency and electrification.
  • The bill also earmarks funds for “climate-focused research”, such as carbon capture and hydrogen.

Paying for the American Jobs Plan

President Biden has also proposed a “Made in America” tax, which would raise the corporate tax rate to 28 percent, with the statement saying that the “tax plan will return corporate tax revenue as a share of the economy to around its 21st century average from before the 2017 tax law and well below where it stood before the 1980s. Further tax reforms aim at discouraging offshoring and working with other countries to prevent corporations from moving headquarters to tax havens.

One element to President Biden’s tax reforms that will create a more level playing field for the rail industry is his aim to eliminate tax preferences for fossil fuels and make polluting industries pay for the environmental clean up. At the moment, the fossil fuel industry gets billions of dollars in subsidies, loopholes and special foreign tax credits.

In addition to implementing these measures, the administration will invest in their enforcement.

“Serious Concerns” from Private Freight Railroads

The Association of American Railroads (AAR) said, however, that the country’s privately owned freight railroads “raised serious concerns” about the administrations plans for how to pay for the proposals.

Ian Jefferies, President and CEO, AAR, said:

“America’s railroads have long recognized the need for robust, sustainable funding back into the nation’s integrated transportation network.

“President Biden’s proposal makes clear his administration’s priority for making these much-needed investments to restore our highways, bridges and roads, and improve our ports. At the same time, mission number one is fueling an economic recovery. Railroads would urge the administration and Congress to abandon these divisive, unrelated funding sources and instead work toward bipartisan solutions to restore the Highway Trust Fund to a true user-pays system.”

Amtrak Welcomes American Jobs Plan

Amtrak welcomed the plan to boost infrastructure spending, saying that if Congress provided the funding, it would be able to bring the Northeast Corridor to a state of good repair and expand the destination it serves. Currently, many bridges, stations and tunnels on the NEC are beyond their design life and therefore in need of immediate replacement or rehabilitation.

Bill Flynn, CEO, Amtrak, said:

“President Biden’s infrastructure plan is what this nation has been waiting for. Amtrak must rebuild and improve the Northeast Corridor and our National Network and expand our service to more of America. The NEC’s many major tunnels and bridges – most of which are over a century old – must be replaced and upgraded to avoid devastating consequences for our transportation network and the country. In addition, Amtrak has a bold vision to bring energy-efficient, world-class intercity rail service to up to 160 new communities across the nation, as we also invest in our fleet and stations across the U.S. With this federal investment, Amtrak will create jobs and improve equity across cities, regions, and the entire country – and we are ready to deliver. America needs a rail network that offers frequent, reliable, sustainable and equitable train service. Now is our time, let’s make rail the solution.”

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